This Chinese auction site allows companies to offer a rebate to buyers who leave a review

This Chinese auction site allows companies to offer a rebate to buyers who leave a review

shopping-on-mobile-phoneYou’ve decided to buy a smart phone on eBay and you’ve narrowed your choices down to two identical phones, at identical prices with the same shipping options. The only real difference between the sellers is that one has positive feedback from 100 customers and the other has positive feedback from 1. Which one do you trust with your money? Most people are going to go with the one that with more feedback because we associate higher feedback numbers with good customer service.

The same thing happens when you’re searching for items on Amazon. You find two similar products but one has 45 four-star reviews, the other only has 2. At a glance, it would seem like product one is a better buy.

In both of these scenarios, the lesser of the two could actually be the better seller or product. The product might have been listed yesterday so it hasn’t had time to get many reviews. The seller might have had the bad luck of selling to 100 people who were thrilled but didn’t feel compelled to leave feedback.

So how can we level the review playing field? Would you believe by paying for reviews?

Paying for reviews? Isn’t that illegal? Or immoral? Or scammy? It could be, if you’re paying one person to create 1,000’s of phony reviews. But what if you could incentivize buyers to leave their two cents by giving them back a few cents more?

Scott Kominers of Bloomberg recently posted a piece about a Chinese auction site called Taobao and their “rebate-for-feedback” mechanism. Merchants who sell on the site have the option of refunding about 20 cents to any customer who leaves a review – good or bad. Since customers know you’re not controlling the outcome, the very act of offering the rebate can improve a company’s reputation.

Kominers explains:

“. . .if you’re a merchant entering the market without any reviews at all, then you can signal high quality by offering rewards for feedback. Customers will flock to you because they can see that you expect their experiences to be positive. (And if instead you happen to be a low-quality merchant offering rewards for reviews so as to pose as high-quality, you will rapidly buy yourself lots of negative reviews.)”

Taobao’s system appears to be working mainly because it only allows buyers to review sellers. This keeps sellers from flooding the system with thousands of bogus reviews. Here in the US, Amazon allows anyone to leave a review on any product so an author can ask their friends to leave reviews on a book they’ve never read. Last year, Amazon sued over 1,000 fake reviewers who were advertising their services on Fiverr,  but that’s only a tiny bubble in a large tub of suds.

The only real downside to a “rebate-for-feedback” system is that it favors companies with money to spare. Then again, if your company can’t afford to give up 20 cents per sale in return for good word of mouth, you should probably try a different line of work.

As an author, I’d happily give readers a rebate for a book review on Amazon because I know that more reviews almost always equal more sales. In my unscientific estimation, what I’d pay out in rebates, I’d more than make up for in increased royalties.

How about it Amazon? Instead of pushing people to create fake reviews just to get ahead, why not let us pay for those all-important star reviews?

Would you trust a “rebate-for-feedback” system on Amazon or Yelp? And would you be willing to pay to increase your company’s online reputation?